Rosneft, Exxon Ink Black Sea Exploration Deal

The hope is to find a billion tons of oil and gas.

Dave Clark, Agence France-Presse | Jan 27, 2011

Russian energy giant Rosneft and Exxon Mobil struck a $1 billion deal on Jan. 27 to hunt for oil and gas under the Black Sea, and promised more joint ventures to come. Rosneft president Eduard Yurevitch Khudaynatov said he hopes to find a billion tons of oil and gas -- mainly oil -- in the 4,320 square mile Tuapse Trough, in waters off the Krasnodar region.

Using the U.S. giant's latest exploration technology, now shared with its Russian partner, the joint venture will survey the seabed this year and hopes the first offshore platform may be operational by the end of 2012, he said. "It is not just the Black Sea, we will go on together to work on other offshore projects in other areas," he said after the signing ceremony, adding: "But we have a lot of work to do."

CEO Rex Tillerson said ExxonMobil would invest a billion dollars in the exploration stage of the venture, and that the companies would decide on future investments when the time came to begin production.

The two firms work together in oil fields off Sakhalin in Russia's Pacific far east, but this is their first deal in the Black Sea. "Exxon Mobil will bring its technology, project evaluation capabilities and innovation to complement Rosneft's strengths and experience in the region," the American executive said as the deal was announced.

The Exxon Mobil contract was the second major victory for Russian oil at this year's Davos conference, after Rosneft marked the first day of the meeting by expanding its Arctic deal with BP. BP struck a deal with Rosneft in mid-January to explore and develop the latter's three licensed blocks on the Russian Arctic continental shelf said to contain five billion tonnes of oil and 3,000 billion cubic meters of gas.

They will also set up an Arctic technology centre to focus on safety, the environment and emergency procedures.

In Davos, both parties inked a further deal to increase cooperation, including plans for joint projects in third-party markets.